For some time, markets have expected rates to rise further and stay higher for longer than economists do. So when will this battle be resolved? In his guide to the week ahead, James Smith argues that by next spring, calmer inflation and less hawkish central banks could force a long-overdue rethink in financial markets over the outlook for interest rates It won’t have escaped your notice that, ever since the Iran War began, markets and economists have vehemently disagreed over the number of rate hikes we’re going to get from central banks. Markets are pricing in roughly three hikes from both the European Central Bank and the Federal Reserve by this time next year, whereas we’re expecting just one from each.
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